The next-gen battle is wide open

Sony, Nintendo and Microsoft released their latest earnings reports this week, and there’s some interesting stuff in the numbers.

On first glance, the reports are great news for Nintendo and dreadful news for Sony. Nintendo made nearly half a billion dollars in profit in the first half of the fiscal year thanks to the DS. They’ve sold 27 million of the things in just under two years. Meanwhile, Sony made a measly $14 million in its second quarter. When your games division loses $368 million and you have to eat $429 million in laptop battery recalls, it’s going to be tough to do well. With so many problems and uncertainty with the Playstation 3, the battery recall has to be killing Sony’s executives.

Here’s where things get interesting. Microsoft also released its earnings statement, and they’re still losing money on Xbox 360 — though the $96 million in losses is much less painful than Sony’s. But the Xbox 360 doesn’t have the head start you’d expect after a year of having the next-gen field all to itself. Microsoft has shipped 6 million 360s since the launch last November. But in July, they had shipped 5 million. Why only 1 million consoles shipped in the past three months? Are they stockpiling inventory for the holidays? Were Xbox 360s sitting unsold on store shelves? Some reports give the 6 million figure as number sold, not shipped, and some use “shipped” and “sold” interchangeably. So it’s not entirely clear. But either way, the number of Xbox 360s sold or shipped has drastically slowed since June and July. Gears of War should change that, but Microsoft clearly hasn’t taken advantage of having the first next-gen system.

And that’s very good news for Sony and Nintendo.

— October 28, 2006

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